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Measuring the Economic Impact of the Sharing Economy

While at our Strata Conference, I stopped by +John Furrier's Cube for an interview. We talked about a lot of things, but this is probably the first public airing of some ideas I've been thinking a lot about lately, namely how we can best measure the economic impact of what Lisa Gansky calls the sharing economy.

I start with a paper I read in the 70s, Steve Baer's "Clothesline Paradox," which pointed out that when people hang their clothes on the line rather than putting them in the dryer, that reduction in demand doesn't go on our energy books as a credit to the renewables column, it just disappears from our accounting.

The same is true of open source software, or, for that matter, of most of the products of what +Clay Shirky calls "cognitive surplus."

This discussion is important in many contexts. For example, when talking about SOPA/PIPA, the movie industry talked about economic impact while the internet industry talked about freedom. Yet it's quite clear to me that there is a new economy of content that is quite possibly larger than the old one, but just not as well measured, because we measure value captured, not value created for users.

In other fields, we celebrate lower prices for consumers and expansion of demand, but here, paradoxically, we are ignoring it, as well as ignoring the many real economic transactions that do occur. I intend to pull together some people to change that.
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I often think that we have no metric or understanding for value outside of economics.

Value is really only capable of being expressed in dollar signs these days. That's the real problem, IMHO.

I don't expect to see much movement on this, as we really blew that opportunity in the crash of 2008 by focusing on growth and recovery before we diagnosed and solved the problem.

I'd love to see who you pull together to solve this problem.
Another thought...
Have you looked at the great orators of our time and the language and metaphor they use to communicate?

Up until the 1960s, political and cultural speech that was important for society was always expressed in terms of values, health and morality, and since the 1960s there has been a massive influx of monetary metaphors and language. "I feel like a million bucks."

Go back to the Cross of Gold Speech - a speech about monetary policy that used values, health and morality to communicate - not much money language used there. Look at the language of the Depression era, and again, there's not a lot of money metaphor used.

It's fascinating.

And one last little thing...

Did you know that the modern definition of 'economy' only came into existence in the 20th century? I think that's pretty wild.
I'm always glad to see it when you bear down on this issue, particularly the need to adjust the way we think about measuring. The National Endowment for the Arts and the Monitor Institute are currently wrestling with mapping the relationship between "the arts" and the quality of life in American communities, and the Smithsonian is wrestling with new ways to understand relationship between our output/effort and our mission ("the increase and diffusion of knowledge"). We know that it's about more than symphony tickets and visits to the museums, but we don't quite know where else to put the sensors - - yet.
I agree. I thing the same about the Internet. How much is saved because we don't need to travel to a government office to fill a form and instead we do that online? Similarly online meetings. collaborations and other communications happen with great benefit to the economy but it is hard to measure the actual savings.
+Ron Watson Add to that that the term "rich" (from Celtic) originally meant "powerful". It had nothing to do with possession of money. As an etymology professor of mine said, now it has come to refer to the only expression of power these days.
Seeing Steve Baer’s “Clothesline Paradox” live on like that warms this old editor’s heart.
+Klaus Guenther - Great point!

Money is the means, not the end. The end is Power. The rich or the wealthy don't care about money, they care about the power that money gives them.

I wish we could all learn that lesson.
Very worth reading. It's interesting that the technology used to measure heating energy usage in Germany (an energy meter mounted on the radiator) is susceptible to record solar heating, leading in some cases to a very flawed distribution of the energy bill in multi-unit buildings. It is nearly impossible to truly fix this problem, and people who live in top stories end up paying part of the heating bill for their neighbors.
Insightful. Two words came to mind when I was listening to this: "dark matter". Thing A which we can observe and measure (total revenues generated by software, maybe?) less Thing B which we can observe and measure (Sales figures for commercial software industry) equals Thing C which we can't measure (value created by free software). Does that logic hold? Obviously a lot of the people in Thing A would argue that they create some value, so we would need to take a multiplier there, but it might be "back of the envelope" possible.
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